Al Lewis: Pastor Barry Minkow Backslides

The first time I interviewed renowned Ponzi-schemer Barry Minkow, I asked whether he had a conscience.

It was a dumb question. A guy who has no conscience does not know what one is. And a guy who does have a conscience can't prove it.

"Truth plus time equals trust," Minkow answered.

It was a good answer. Time has passed since my first interview with Minkow in January 2009, and now it looks like the charming, Jesus-loving fraudster may be headed back to prison.

Minkow's attorney, Alvin Entin of Entin & Della Fera in Fort Lauderdale, Fla., said Minkow may soon plead guilty to one count of trading on nonpublic information in a developing agreement with the U.S. Attorney's Office for the Southern District of Florida. It is a charge that could carry up to five years.

Entin said the charges involve stock options that Minkow traded in 2009 to bet against the price of Miami-based homebuilder Lennar Corp. (LEN).

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"It was a silly thing for him to do," Entin said. "He's stepping up to take responsibility."

Minkow didn't return my messages. I wish we could have talked, because I had taken a liking to him, even to the point of discussing religion.

I told Minkow of my belief that some people simply do not have that still small, voice in their hearts known as conscience--and that they often do very well in business, politics and even religion until they're exposed.

"You're dangerous because you have this gift of gab, this ability to communicate," U.S. District Judge Dikran Tevrizian told Minkow at his sentencing in 1989. "You don't have a conscience."

Minkow was sentenced at age 23 for the text-book case study known as the ZZZZ Best Co., a carpet-cleaning company that he took public. Minkow had claimed a net worth of $90 million, drove a red Ferrari with a "ZZZZ BEST" license plate and appeared on Oprah.

After it was all exposed, Minkow headed to prison for nearly eight years.

Minkow says he found Jesus there, and when he got out, he embarked on what was by many accounts an amazing transformation.

He earned a master's degree in divinity from Jerry Falwell's Liberty University. Then he became pastor of Community Bible Church in San Diego. He wrote a book called "Cleaning Up: One Man's Redemptive Journey Through the Seductive World of Corporate Crime." He served as an informant for law enforcers and a source for journalists, and he was recently involved in an unreleased movie about his life called, "Minkow."

What got Minkow back into trouble was his "Fraud Discovery Institute," which he founded to take on corporate fraud in an act of both redemption and enterprise.

Over time, Minkow won the praise of his former prosecutor and even Judge Tevrizian. "He has done some good things," Tevrizian told CBS's "60 Minutes" in 2005. "He's uncovered several hundreds of millions of dollars' worth of frauds. And I give him credit for that."

But many of Minkow's dealings as a fraud investigator seemed ethically challenged. He'd bet against the companies he targeted as a fraud investigator, taking short positions in the stock market. He claimed he always disclosed this practice--making it legal, but not impervious to critics.

Minkow brushed off attackers with his wit: "It's called the law of everybody-can-earn-a-living-except-Barry-Minkow."

Minkow accused Lennar of financial fraud on par with Bernie Madoff, causing its stock to plunge more than 20%. Lennar fired back with a lawsuit accusing him of libel and extortion.

"We have a saying: The minute they sue you for libel, you know you are right," Minkow told me. "Nobody knows Ponzi schemes better than us."

Lennar declined comment.

Minkow told me he did not have a conscience when he was running ZZZZ Best.

"We could walk into a meeting...and I could tell a community of Wall Street investors that my company was profitable when I knew it was not--and not blink," he said. "I was a thief and a liar and a crook."

But after turning to the Lord in prison, his conscience was restored. "The whole theme of the Bible is that people can change," he argued.

Unfortunately, the Bible does not claim that all people can change.

"I find it improbable that a renegade businessman can grow a conscience like a salamander grows a lost appendage," I wrote of Minkow.

I was hoping he'd prove me wrong.

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at al.lewis@dowjones.com or tellittoal.com)